Dreamliner contributes to more angst for Boeing
Boeing Co. faces a new cash drain from structural flaws on its marquee 787 Dreamliner jets, potentially slowing the company’s recovery from the coronavirus pandemic and the grounding of the 737 Max, said a Bernstein analyst.
The Dreamliner’s woes will sap $7.5 billion from Boeing’s free cash flow for 2020 and 2021, Bernstein’s Douglas Harned said Monday as he cut the planemaker to the equivalent of “sell.” Boeing handed over only one 787 jet in December after none in November, Harned estimated, suggesting delays from repairs to undelivered jets.
“The problem we see is that the 787 situation is getting worse and we are not yet able to fully bound the negative impact,” Harned said in a report. He lowered his price target 10% to $199.
The burgeoning financial impact points to new turmoil for Boeing as it tries to rebound from the sharpest downturn in aviation history. While the Dreamliner’s defects don’t pose an immediate threat to safety, Boeing Chief Financial Officer Greg Smith acknowledged last month that inspections were taking longer than expected.
That contrasted with the company’s upbeat message in October, when it predicted a strong fourth quarter for 787 deliveries.
The Chicago-based company declined to comment beyond Smith’s warning last month about weak deliveries. The CFO said at the time that Boeing anticipated handing over undelivered Dreamliners throughout 2021.
About 75 completed Dreamliners are stored. Harned predicted the number of stored 787 planes would continue to grow during the first quarter.